UDX, LLC v. UNIVERSITY DIRECTORIES, LLC et al
Filing
35
MEMORANDUM OPINION AND ORDER. Signed by JUDGE THOMAS D. SCHROEDER on 6/26/2015, that Defendant Heavner's Motion to Refer Proceeding to United States Bankruptcy Court for the Middle District of North Carolina (Doc. 17 ) is GRANTED and the case is referred to the bankruptcy court pursuant to Local Rule 83.11. FURTHER, that Plaintiff UDX's Motion for Abstention and Remand (Doc. 19 ) is DENIED. (Daniel, J)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
UDX, LLC,
Plaintiff,
v.
JAMES A. HEAVNER,
Defendant.
)
)
)
)
)
)
)
)
)
1:14cv918
MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, District Judge.
Before the court are the motion of Defendant James A. Heavner
to refer this case to the bankruptcy court for consideration with
related proceedings (Doc. 17) and the competing motion of Plaintiff
UDX, LLC (“UDX”) for abstention and remand (Doc. 19).
For the
reasons set forth below, UDX’s motion will be denied, Heavner’s
motion will be granted, and the case will be referred to the
bankruptcy court.
I.
BACKGROUND
On October 22, 2014, UDX, a North Carolina limited liability
company, initially filed suit in State court against several
companies
—
University
Directories,
LLC;
Vilcom,
LLC;
Vilcom
Interactive Media, LLC; Vilcom Properties, LLC; Vilcom Real Estate
Development, LLC, (collectively, the “Corporate Defendants”) — as
well
as
Heavner,
University
Directories,
LLC’s
manager
and
allegedly the registered agent for at least one of the other
Corporate Defendants.
(Doc. 24 ¶¶ 1–2; Doc. 2 ¶¶ 4–5.)
The
lawsuit arises out of certain loans made by Harrington Bank, FSB,
now held by UDX and allegedly guaranteed by Heavner, and raises
numerous State law claims regarding them.
67.)
(See Doc. 2 ¶¶ 2–8, 30–
On October 24, 2014, Corporate Defendants filed voluntary
petitions seeking relief under Chapter 11 of the Bankruptcy Code;
the bankruptcy case is assigned Case No. 14-81184. 1
(Doc. 1 ¶ 4;
Doc. 24 ¶ 15.)
On October 31, 2014, Corporate Defendants removed this action
to this court pursuant to 28 U.S.C. § 1452, contending that this
court has jurisdiction because the action arises under Title 11 or
arises in or relates to cases under Title 11. 2
(Doc. 1.)
The
Corporate Defendants then moved to refer UDX’s claims against them
to the pending bankruptcy case.
(Doc. 11.)
On November 6, UDX
voluntarily dismissed all of its claims against the Corporate
Defendants, mooting the Corporate Defendants’ motion and leaving
Heavner as the only defendant.
(Doc. 13.)
On December 23, 2014, Heavner filed the current motion to
refer this case to the bankruptcy court on the grounds that the
case relates to Case No. 14-81184.
answered UDX’s original complaint.
(Doc. 17.)
(Doc. 18.)
Heavner also
UDX responded to
1
On June 17, 2015, the bankruptcy court converted Case No. 14-81184 from
one under Chapter 11 of Title 11 to one under Chapter 7 of Title 11.
2
Neither party contends that the automatic stay created by 11 U.S.C.
§ 362 affected Corporate Defendants’ removal.
2
Heavner’s motion (Doc. 19) and, contrary to this district’s local
rules,
titled
a
section
of
its
response
brief
“motion
for
abstention and remand” (id. at 4–6). See Local Rule 7.3 (requiring
that all motions be accompanied by a brief and be “set out in a
separate pleading”).
its
complaint,
After filing its response, UDX also amended
asserting
three
causes
of
action
under
North
Carolina law against Heavner: breach of contract, defamation, and
unfair and deceptive trade practices under N.C. Gen. Stat. § 751.1.
(Doc. 24 ¶¶ 20–38.)
Filing no reply on his motion to refer, Heavner nevertheless
responded to UDX’s request for abstention and remand (Doc. 25), to
which UDX replied (Doc. 32).
complaint.
(Doc. 26.)
Heavner also answered UDX’s amended
With UDX’s motion fully briefed and the
time for Heavner’s reply on his motion to refer having expired,
the motions are now ripe for consideration.
II.
ANALYSIS
The parties seek different forums for adjudication of this
case.
court.
Heavner seeks to have the case referred to the bankruptcy
(Doc. 17.)
UDX argues that the court must abstain and
moves the court to equitably remand the case to the State court.
(Doc. 19 at 4–6.)
Both motions will be addressed below.
3
A.
UDX’s Motion for Abstention and Remand
1.
Abstention
UDX argues that this court must abstain from adjudicating
this proceeding under 28 U.S.C. § 1334(c)(2), 3 which provides:
Upon timely motion of a party in a proceeding based upon
a State law claim or State law cause of action, related
to a case under title 11 but not arising under title 11
or arising in a case under title 11, with respect to
which an action could not have been commenced in a court
of the United States absent jurisdiction under this
section, the district court shall abstain from hearing
such proceeding if an action is commenced, and can be
timely adjudicated, in a State forum of appropriate
jurisdiction.
Thus, the application of mandatory abstention under § 1334(c)(2)
requires the moving party to establish that
(1) a party to the proceeding files a timely motion to
abstain; (2) the proceeding is based upon a state law
claim or state law cause of action; (3) the proceeding
is a “non-core, but related to” proceeding (not “arising
under” Title 11); (4) the proceeding is one which could
not have been commenced in a federal court absent
jurisdiction under § 1334; (5) an action is commenced
and can be timely adjudicated in state court.
Massey Energy Co. v. W. Va. Consumers for Justice, 351 B.R. 348,
3
Neither party disputes that mandatory abstention under § 1334 applies
to cases removed to federal court. See In re Southmark Corp., 163 F.3d
925, 929 (5th Cir. 1999) (noting the “majority rule” that abstention
applies to cases removed to federal court); In re Midgard Corp., 204
B.R. 764, 774 (B.A.P. 10th Cir. 1997) (“The majority of courts, however,
hold that abstention is applicable to removed cases. These courts find
that two proceedings are not necessary for abstention to apply and
abstention, or abstention coupled with remand, transfers a removed
proceeding to state court.”); Massey Energy Co. v. W. Va. Consumers for
Justice, 351 B.R. 348, 350 (E.D. Va. 2006) (applying mandatory abstention
to proceeding removed to federal court).
4
350 (E.D. Va. 2006).
UDX has not demonstrated that mandatory
abstention applies in this case.
Assuming, without deciding, that UDX’s request is a “timely
motion” under § 1334(c)(2), 4 UDX must still show that this is a
“proceeding based upon a State law claim or State law cause of
action . . . with respect to which an action could not have been
commenced in [this] court.”
28 U.S.C. 1334(c)(2); see also Stoe
v. Flaherty, 436 F.3d 209, 219 n.5 (3d Cir. 2006), as amended (Mar.
17, 2006) (noting that moving party “had the burden of proving his
right to mandatory abstention”); Va. ex rel. Integra Rec LLC v.
Countrywide Sec. Corp., No. 3:14CV706, 2015 WL 3540473, at *6 n.13
(E.D. Va. June 3, 2015) (concluding that court “was most persuaded
by the traditional notion that the moving party carries the burden
of proof” in deciding motion for mandatory abstention); Frelin v.
4
The timeliness of UDX’s request is far from clear, and the right to
require a court to abstain can be waived by a party who delays in making
a motion for abstention. See In re Midgard Corp., 204 B.R. 764, 776
(B.A.P. 10th Cir. 1997). “[A] party acts in a timely fashion when he
or she moves as soon as possible after he or she should have learned the
grounds for such a motion.” In re Novak, 116 B.R. 626, 628 (N.D. Ill.
1990); see also Waugh v. Eldridge, 165 B.R. 450, 452 (Bankr. E.D. Ark.
1994) (observing that “lengthy delay, combined with the lack of any
evidence that the motion could not have been filed earlier, renders the
motion untimely”). Here, UDX waited over two months after the case was
removed as well as two months after it dismissed its claims against the
Corporate Defendants before raising the issue of mandatory abstention.
See In re AHT Corp., 265 B.R. 379, 384 (Bankr. S.D.N.Y. 2001) (dismissing
motion as untimely for two and a half month delay in filing motion); cf.
Cline v. Quicken Loans Inc., No. 5:11CV63, 2011 WL 2633085, at *4 (N.D.W.
Va. July 5, 2011) (timely motion filed three weeks after removal).
Because of the other flaws in UDX’s request, timeliness need not be
addressed further.
5
Oakwood Homes Corp., 292 B.R. 369, 381 (Bankr. E.D. Ark. 2003)
(“The movant has the burden to prove that abstention is required
under § 1334(c)(2).”).
Although the Corporate Defendants removed this action under
28 U.S.C. § 1452(a), 5 which authorized the removal, 6 they have been
dismissed as parties.
Under
28
U.S.C.
§
Thus, only Heavner remains as a defendant.
1332(a),
the
court
has
subject
matter
jurisdiction over a “civil action[] where the matter in controversy
exceeds the sum or value of $75,000 . . . and is between . . .
citizens of different States.”
UDX contends that (1) diversity
jurisdiction is lacking because Heavner is domiciled in North
Carolina (as UDX alleges it is); and (2) even if Heavner is not
domiciled in North Carolina, diversity did not exist at the time
of removal.
As to UDX’s first contention – that Heavner is a North
Carolina citizen for purposes of diversity jurisdiction, “state
5
28 U.S.C. § 1452(a) provides: “A party may remove any claim or cause
of action in a civil action other than a proceeding before the United
States Tax Court or a civil action by a governmental unit to enforce
such governmental unit’s police or regulatory power, to the district
court for the district where such civil action is pending, if such
district court has jurisdiction of such claim or cause of action under
section 1334 of this title.”
6
“Under the bankruptcy removal statute, . . . any one party has the
right to remove the state court action without the consent of the other
parties.” Creasy v. Coleman Furniture Corp., 763 F.2d 656, 660 (4th
Cir. 1985); see also Fromhart v. Tucker, No. 5:11CV97, 2011 WL 5202239,
at *3 (N.D.W. Va. Oct. 31, 2011) (applying Creasy’s rule allowing for
removal without unanimity).
6
citizenship for purposes of diversity jurisdiction depends not on
residence,
but
on
national
citizenship
and
domicile.”
Axel
Johnson, Inc. v. Carroll Carolina Oil Co., 145 F.3d 660, 663 (4th
Cir. 1998).
“Domicile requires physical presence, coupled with an
intent to make the State a home.”
Johnson v. Advance Am., 549
F.3d 932, 937 n.2 (4th Cir. 2008).
Determining a party’s intent
requires an examination of the totality of the circumstances,
including
“current
residence,
voting
registration
and
voting
practices, location of personal and real property; location of
brokerage and bank accounts; memberships in unions, fraternal
organizations, churches, clubs, and other associations; place of
employment
or
business;
driver’s
registration; payment of taxes.”
license
and
automobile
Hanks v. Coan, No. 1:99CV00119,
1999 WL 1938851, at *3 (M.D.N.C. Aug. 17, 1999) (quoting Dyer v.
Robinson, 853 F. Supp. 169, 172 (D. Md. 1994)).
Here, Heavner’s stated intention is, and has been for the
past fifteen years, that he is a South Carolina citizen.
25-2 ¶ 3.)
(Doc.
He is registered to vote in South Carolina and has
recently voted in that State.
(Id. ¶ 4; Doc. 32-1 at 20.); see
also Am. Heartland Port, Inc. v. Am. Port Holdings, Inc., No.
5:11CV50, 2014 WL 1123384, at *5 (N.D.W. Va. Mar. 21, 2014)
(“Voting raises a presumption that the voter is a citizen in the
state in which he votes, and the presumption must be rebutted by
evidence
showing
a
clear
intention
7
that
his
citizenship
is
otherwise.” (quoting Griffin v. Matthews, 310 F. Supp. 341, 343
(M.D.N.C.
1969))
(internal
quotations
and
brackets
omitted)).
Heavner also maintains a South Carolina driver’s license and files
resident income tax returns in South Carolina.
(Doc. 25-2 ¶ 4.)
Finally, according to Heavner, his “federal income tax returns for
approximately twenty (20) years reflect . . . [that he is] a
citizen and resident of the State of South Carolina.”
(Id.)
These
facts demonstrate that Heavner’s domicile is South Carolina.
UDX’s arguments to the contrary are unpersuasive. As evidence
of Heavner’s lack of intent to be domiciled in South Carolina, UDX
first notes that Heavner approved the sale of a home on Hilton
Head Island, South Carolina.
(Doc. 32 at 5 & n.1.)
Heavner,
however, stated in his deposition, “[W]ell, we had a home at Hilton
Head.
home.”
It’s actually our second home down there.
(Doc. 32-1 at 3.)
We built this
Unfortunately, UDX failed to provide
the question to which this answer responds.
An answer without a
question is of little assistance to the court.
Even if the court
considers the response only, it is at best ambiguous whether
Heavner means a “second home” as in “another” home in South
Carolina, or “second home” as in a “vacation” home in South
Carolina with his primary residence elsewhere.
As UDX bears the
burden of showing that the statutory requirements of § 1334(c)(2)
have been met, it has failed to demonstrate that Heavner has no
home in South Carolina.
See In re EZ Pay Servs., Inc., 390 B.R.
8
421, 431 (Bankr. M.D. Fla. 2007) (denying motion for mandatory
abstention “based on the Plaintiffs’ failure to satisfy their
burden of proof under § 1334(c)(2)”).
Moreover, even if Heavner
recently sold his only home in South Carolina, “[a]n individual
can reside in one state and be domiciled in another state.”
See
Blake v. Arana, No. CIV. WQQ-13-2551, 2014 WL 2002446, at *2 (D.
Md. May 14, 2014); see id. at *3 (finding defendant’s maintenance
of
a
Maryland
driver’s
license,
despite
moving
to
Virginia,
persuasive evidence of an intent to remain domiciled in Maryland).
UDX further notes that Heavner works mainly in North Carolina,
maintains membership in various organizations in North Carolina, 7
and has a doctor, a dentist, and other professional acquaintances
in North Carolina.
(Doc. 32 at 7–8.)
At least some of the time,
however, Heavner works in South Carolina when he is not needed in
North Carolina.
Carolina.
(Doc. 32-1 at 5.)
(Id. at 13.)
He also has a doctor in South
Until somewhat recently, he was a member
of the South Carolina Yacht Club and still “frequently” attends
“the Cotillion” in South Carolina.
(Id. at 17.)
where Heavner’s family — namely his wife — resides.
It is unclear
While neither
party presented evidence on this, UDX makes no assertion that his
wife resides in North Carolina.
(See id. at 17 (Heavner noting
7 Heavner is a member of the Chapel Hill Rotary Club but only pays for
membership when he attends, which aligns with the view that Heavner is
domiciled in South Carolina but maintains work relationships in North
Carolina. (See Doc. 32-1 at 17.)
9
that his wife “keeps up with” his membership in the South Carolina
Cotillion).)
Finally, UDX contends that Heavner, “as a native of North
Carolina,” has the burden to establish his domiciliary in South
Carolina.
(Doc. 32 at 5.)
Heavner was indeed born in North
Carolina.
(Doc. 32-1 at 18.)
“An individual . . . acquires a
‘domicile of origin’ at birth, which continues until a new one is
acquired.”
Dyer v. Robinson, 853 F. Supp. 169, 172 (D. Md. 1994)
(quoting Miss. Band of Choctaw Indians v. Holyfield, 490 U.S. 30,
48
(1989)).
The
facts
above
—
particularly
Heavner’s
voter
registration, driver’s license, and tax payments — establish his
domicile in South Carolina.
See id. (“When establishment of a new
domicile is at issue, it is determined by two factors: residence
in the new domicile and intention to remain there.”); Am. Heartland
Port, 2014 WL 1123384, at *5 (holding that voting registration
raises a “presumption” that the voter intends to be a citizen of
his registration state).
UDX alternatively contends that, even if Heavner is domiciled
in South Carolina, diversity did not exist at the time of removal.
UDX’s argument appears to be that because, at the time of removal
this was not a proceeding “with respect to which an action could
not
have
been
commenced
in”
this
court
based
jurisdiction, § 1334(c)(2) requires abstention.
on
diversity
UDX fails to
explain why § 1334(c)(2) requires an inquiry into whether the
10
original proceeding, as opposed to the current proceeding, was one
“with respect to which an action could not have been commenced in”
this
court
based
on
diversity
jurisdiction.
The
text
of
§ 1334(c)(2) offers no indication that the word “proceeding” should
be read to refer to the proceeding as it was rather than as it is
now. 8
Nevertheless, even assuming, without deciding, that UDX’s
interpretation of § 1334(c)(2) is correct, its argument that
diversity did not exist at the time of removal still fails.
Usually, when determining diversity between citizens in removal
cases, “[d]iversity must be established at the time of removal.”
Higgins v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1166 (4th
Cir. 1988).
Importantly, however, “[d]iversity may be created
after the filing of a complaint through voluntary acts of the
plaintiff.”
Yarnevic v. Brink’s, Inc., 102 F.3d 753, 754 (4th
Cir. 1996).
“The rationale for this rule is that although a
defendant should not be allowed to change his domicile after the
complaint is filed for the sole purpose of effectuating removal,
8
There is also an inconsistency in UDX’s argument. UDX offers the court
conflicting time periods to assess its request for mandatory abstention.
On the one hand, it contends that, at the time of removal, this case is
one “with respect to which an action could not have been commenced in”
this court based on diversity jurisdiction. 28 U.S.C. § 1332(c). Yet,
on the other hand, UDX argues that this proceeding’s current claims
against Heavner are only “related to” Title 11 as required by § 1332(c),
without analyzing the other claims brought at the time of removal and
later dismissed. (Doc. 19 at 5.)
11
there is no reason to protect the plaintiff against the adverse
consequences of his own voluntary acts.”
Id. at 755.
Neither party contends that diversity of citizenship existed
at the commencement of the State court action or at the time of
filing for removal. 9
After the filing for removal, however, UDX
voluntarily dismissed all of its claims against the Corporate
Defendants, leaving Heavner as the only defendant.
(Doc. 13.)
Those dismissals cured the jurisdictional defect, allowing for the
creation of diversity jurisdiction in this court.
Moffitt v.
Residential Funding Co., LLC, 604 F.3d 156, 159–60 (4th Cir. 2010)
(holding that plaintiff’s voluntary amendments of “facts that
clearly give rise to federal jurisdiction” cured jurisdictional
defects without requiring remand). By dismissing all of its claims
against the Corporate Defendants and amending its complaint to
bring claims only against Heavner, UDX has failed to show that its
dismissal
did
not
confer
an
jurisdiction on this court. 10
additional
potential
basis
for
See Moffitt, 604 F.3d at 159–60
9
Indeed, Heavner and the Corporate Defendants’ notice of removal cites
only Title 11 as the basis of federal jurisdiction.
(Doc. 1.)
UDX
points out that it is a North Carolina limited liability company (Doc.
24 ¶ 2; Doc. 30 at 1; see also Doc. 25-1 (noting UDX’s organization
under North Carolina law)) and that Heavner has admitted that it and the
Corporate Defendants were North Carolina limited liability companies
(Doc. 18 at 1). However, citizenship of an LLC depends on the citizenship
of its members, Carden v. Arkoma Assocs., 494 U.S. 185, 195–96 (1990);
Gen. Tech. Applications, Inc. v. Exro Ltda, 388 F.3d 114, 120–21 (4th
Cir. 2004), and neither party has provided that information.
10
UDX states that it “had no choice but to dismiss the [Corporate
12
(concluding that allowing for jurisdictional cures is “grounded”
partially in considerations of judicial economy); Bkcap LLC v.
Captec Franchise Trust 2000-1, No. 3:07-CV-00637, 2009 WL 3075353,
at *2 (N.D. Ind. Sept. 24, 2009) (holding that voluntary dismissal
conferred
diversity
jurisdiction
and
that
“a
remand
in
this
instance would simply constitute a waste of judicial resources”);
Chaney v. First Am. Nat. Bank, No. 3:05-0798, 2009 WL 275198, at
*8 (M.D. Tenn. Feb. 4, 2009) (holding that voluntary dismissal
conferred diversity jurisdiction); Dale v. First Am. Nat. Bank,
370 F. Supp. 2d 546, 551 (S.D. Miss. 2005) (same).
But see Hughes
v. Unumprovident Corp., No. C 07-4088 PJH, 2009 WL 29895, at *4
(N.D. Cal. Jan. 5, 2009) (holding that involuntary dismissal did
not confer diversity jurisdiction).
Consequently, because diversity jurisdiction was available
through UDX’s voluntary act and UDX has failed to demonstrate that
such jurisdiction was not satisfied, UDX has not satisfied the
requirements for mandatory abstention under § 1334(c)(2).
Defendants] when Heavner put them into bankruptcy.”
(Doc. 32 at 9.)
This is not true. UDX could have simply filed a suggestion of bankruptcy
which would have operated to stay, rather than dismiss, UDX’s claims
against the putatively non-diverse defendants. UDX voluntarily chose
to dismiss the claims. To require remand here, where Heavner is not
bound by the one-year limitation on his right to seek removal, see 28
U.S.C. § 1446(c), would only invite another removal notice thereafter,
resulting in unnecessary waste and inefficiency. See Moffitt, 604 F.3d
at 160 (finding it a “waste of judicial resources to remand” because
“defendants would almost certainly remove the cases back to federal
court”).
13
2.
Remand
UDX alternatively requests that this court equitably remand
this case to the State court pursuant to 28 U.S.C. § 1452(b). 11
Section 1452(b) provides, “The court [with a removed claim] may
remand such claim or cause of action on any equitable ground.”
Considerations for remand include
(1) duplication of judicial resources; (2) uneconomical
use of judicial resources; (3) effect of remand on the
administration of the bankruptcy estate; (4) case
involves questions of state law better addressed by a
state court; (5) comity; (6) prejudice to the
involuntarily removed parties; (7) lessened possibility
of an inconsistent result; and (8) expertise of the court
where the action originated.
In re Ram of E.N. Carolina, LLC, No. 13-01125-8-ATS, 2013 WL
6038283, at *3 (Bankr. E.D.N.C. Nov. 14, 2013). While citing these
factors, UDX provides no argument as to how they favor remand.
(See Doc. 19 at 5–6.)
In any event, the court finds that these
factors militate against remand.
This district’s bankruptcy court
currently presides over the bankruptcy proceeding related to this
case.
An order remanding this case to State court would therefore
be uneconomical and duplicative, burdening another court with
these interconnected matters.
Keeping this case within federal
11
In its reply brief, UDX appears to make a new argument that the court
permissively abstain from this matter. (See Doc. 32 at 9–11.) Per Local
Rule 7.3(h), “A reply brief is limited to discussion of matters newly
raised in the response.” See Tyndall v. Maynor, 288 F.R.D. 103, 108
(M.D.N.C. 2013).
Heavner’s response does not raise the issue of
permissive abstention, and the court will not consider the newly raised
issue.
14
court will also lessen the possibility of inconsistent judgments.
UDX’s alternative motion to remand will therefore be denied.
B.
Heavner’s Motion for Referral
Heavner argues that, pursuant to Local Rule 83.11, this matter
should be referred to the United States Bankruptcy Court for the
Middle District of North Carolina because it is “related to” Case
No. 14-81184 pending before it.
(Doc. 17.)
Pursuant to 28 U.S.C. § 157(a), “Each district court may
provide that any or all cases under title 11 and any or all
proceedings arising under title 11 or arising in or related to a
case under title 11 shall be referred to the bankruptcy judges for
the district.”
This district’s local rules provide for such
referral to the bankruptcy court for cases “related to” a case
under title 11.
See Local Rule 83.11.
“An action is related to bankruptcy if the outcome could alter
the debtor’s rights, liabilities, options, or freedoms of action
(either positively or negatively) and which in any way impacts
upon the handling and administration of the bankrupt estate.”
In
re A.H. Robins Co., Inc., 86 F.3d 364, 372 (4th Cir. 1996) (quoting
Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984)).
‘related
to’
category
of
cases
is
quite
broad
and
“The
includes
proceedings in which the outcome could have an effect upon the
estate being administered under Title 11.”
15
Id.
Case No. 14-81184 — a Title 11 case — is currently pending
before this district’s bankruptcy court.
In this case (Case No.
14-cv-918), UDX raises three claims against Heavner in its amended
complaint, one of which raises a claim for breach of contract under
guaranties
for
loans
associated
with
bankruptcy court’s Case No. 14-81184.
certain
debtors
in
the
Actions by a lender against
a guarantor on a debtor’s loans are “related to” a debtor’s
bankruptcy case.
See In re 3G Properties, LLC, No. 10-04763-8-
JRL, 2010 WL 4027770, at *2 (Bankr. E.D.N.C. Oct. 14, 2010); HH1,
LLC v. Lo’r Decks at Calico Jacks, LLC, No. ADV 10-02004, 2010 WL
1009235, at *1–3 (Bankr. M.D.N.C. Mar. 18, 2010).
UDX concedes
this point in its request for mandatory abstention, which under
§ 1334(c)(2) requires the proceeding be “related to” a case under
Title 11.
(See Doc. 19 ¶ 11.)
In a hearing held on June 17, 2015,
UDX again conceded this point.
Therefore, because UDX — as a
lender — brings a claim for breach of contract under guaranties on
Title 11 debtors’ loans against Heavner — a guarantor of those
loans, this case is “related to” a case under Title 11 and will be
referred to the bankruptcy court as required by Local Rule 83.11.
III. CONCLUSION
For the reasons stated,
IT IS THEREFORE ORDERED that Defendant Heavner’s Motion to
Refer Proceeding to United States Bankruptcy Court for the Middle
16
District of North Carolina (Doc. 17) is GRANTED and the case is
referred to the bankruptcy court pursuant to Local Rule 83.11.
IT
IS
FURTHER
ORDERED
that
Plaintiff
UDX’s
Motion
for
Abstention and Remand (Doc. 19) is DENIED.
/s/
Thomas D. Schroeder
United States District Judge
June 26, 2015
17
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